A recent study by researchers at Penn State confirmed that fear of loss carries more weight in people’s decision-making processes than the idea of winning.
Investing is one of the biggest and most obvious areas where this phenomenon shows up.
There are investment products built almost entirely around that notion.
Let’s take the covered call ETF. These funds hold a basket of stocks and sell call options against them, which limits upside above a certain price.
In exchange, the fund collects a premium and pays it out to investors as income. You get paid today, but you can give up substantial upside in big rally.
Examples of those ETFs include:
- JPMorgan Equity Premium Income ETF (JEPI): Holds S&P 500 stocks, has moderate volatility and a yield of around 8%.
MarketSurge
- JPMorgan Nasdaq Equity Premium Income ETF (JEPQ): Holds Nasdaq-100…
